The Blubber

Global economic forecasts are deteriorating, with significant trade barriers, stricter financial conditions, declining confidence, and increased policy uncertainty anticipated to negatively affect growth, as stated in the OECD’s most recent Economic Outlook.

The Outlook anticipates a decline in global growth from 3.3% in 2024 to 2.9% in both 2025 and 2026. This deceleration is expected to be most pronounced in the United States, Canada, Mexico, and China, with smaller reductions in other economies.

In the United States, GDP growth is expected to fall from 2.8% in 2024 to 1.6% in 2025 and 1.5% in 2026. In the euro area, growth is projected to increase slightly from 0.8% in 2024 to 1.0% in 2025 and 1.2% in 2026. China's growth is forecasted to decrease from 5.0% in 2024 to 4.7% in 2025 and 4.3% in 2026.

Inflationary pressures have re-emerged in several economies. Increased trade costs in nations that are raising tariffs are likely to further elevate inflation, although this effect will be somewhat mitigated by declining commodity prices. The annual headline inflation in the G20 economies is collectively expected to decrease from 6.2% to 3.6% in 2025 and 3.2% in 2026.

"The global economy has transitioned from a phase of robust growth and falling inflation to a more unpredictable trajectory," stated OECD Secretary-General Mathias Cormann. "Our latest economic outlook indicates that the current policy uncertainty is undermining trade and investment, reducing consumer and business confidence, and limiting growth prospects. It is essential for governments to collaborate to address any challenges in the global trading system in a positive and constructive manner through dialogue – ensuring markets remain open and safeguarding the economic advantages of rules-based global trade for competition, innovation, productivity, efficiency, and ultimately growth."

The Outlook underscores a variety of risks, beginning with the worry that further trade fragmentation, including new tariff increases and retaliatory measures, could exacerbate the growth slowdown and trigger significant disruptions.